Op-Ed: North Korea amassing cryptocurrencies for revenue and trade

Pyongyang
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North Korea appears to be intensifying efforts to obtain more bitcoins and other cryptocurrencies as it is banned from the global banking system and subject to new trade restrictions and sanctions promoted by the US and passed by the UN Security Council.

North Korean hackers are claimed to be increasing their attacks on crypto currency exchanges in South Korea according to a report from the security researcher FireEye Inc. The researcher also claims North Korean hackers breached a bitcoin news website and also collected bitcoin ransom payments from global victims of the WannaCry malware. A recent Digital Journal article also reports on the issue. Luke MacNamara, a Fire-Eye researcher said: “We definitely see sanctions being a big lever driving this sort of activity. They probably see it as a very low-cost solution to bring in hard cash.”

North Korean citizens do not appear to be using cryptocurrencies although when Dennis Rodman the former NBA basket ball star made one of his many visits to the country the anonymous Reddit user "BitcoinDPRK" claimed that he had sent a bitcoin transfer to a fellow Reddit user using the very expensive Internet option for foreigners. Some tour guides were also given paper wallets although it is not clear what use they could make of them. DPRK are the initials for the Democratic Republic of Korea, North Korea's official name.

In the past, North Korean hacking attempts appear intended to steal classified military or government data, but in recent years the emphasis appears to be on raising revenue through stealing currencies. North Korea is suspected to be behind the hacking group Lazarus that last year's $81 million theft from the Bangladesh central bank and also an attack on Sony's Hollywood Studio in 2014. This article discusses some of the alleged relations between Wannacry and various cyber attacks, with the Lazarus group allegedly related to North Korea.

A Bloomberg article speaks of North Korea's interest in cryptocurrencies happening at a time of rising prices and popularity. While the coins may be increasing in popularity bitcoin dropped in price by several hundred dollars over last weekend, as discussed in a recent Digital Journal article. The move is partly in reaction to China's issuing strict regulations governing cryptocurrencies and contemplating more. A recent article claims: "As of July 2017, it is estimated that almost 70 percent of all Bitcoin mining is located in China."This may be a bit high but bitcoin holders and investors are obviously worried about the possible negative effects on the mining operations. Wikipedia describes bitcoin mining as follows: Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

There is said to be evidence that North Korea is becoming involved in bitcoin mining. While this would earn the country some bitcoins, mining is becoming ever more expensive as it uses a great deal of power. Perhaps the specialized mining equipment is obtained from China.

North Korea's Reconnaisance General Bureau, that handle cyber operations was estimated in a 2016 reports by the Cyber Policy Centre of the Australian Strategic Policiy Institute to have 6,000 officers. South Korea may see more attacks concentrated on it as it becomes one of the world's busiest trading hubs for cybercurrencies during 2017. FireEye's McNamara said: "As more money goes into cryptocurrency exchanges and more people buy bitcoin and ethereum, exchanges become larger targets for this group,&gt." So far, only South Korean exchanges have been targeted.

North Korea is no doubt already adapting to continue functioning in spite of sanctions and being frozen out of the international banking system. It is highly ironic that an authoritarian highly centralized powerful government should come to rely on a decentralized financial system designed to frustrate the financial activities of governments that rely on centralized financial systems. Their centralized global system has enabled them to ban North Korea from global banking. However, the cryptocurrency system, designed with the help of many who are libertarians, has come to North Korea''s rescue.

This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com